Security companies allowed to open trading accounts remotely

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Security companies are allowed to open trading accounts remotely

Regulations on remote account opening

One of the most noteworthy contents in the new draft Circular is the addition of a number of regulations related to opening securities trading accounts in the direction of legal completion that securities companies can open trading accounts remotely.

Accordingly, the securities company is decided to do face-to-face meetings or not with customers when establishing the relationship for the first time. In case of not meeting customers directly, security companies must ensure that there are measures, forms and technologies to identify and verify customers.

When opening a trading account remotely for securities transactions, the securities company must meet two requirements: building the process of opening a remote account; take measures, forms and technologies to accurately identify and verify customers.

In addition, the draft Circular also changes regulations on restricting debt.

Specifically, according to Circular No. 210/2012/TT-BTC, the ratio of total debt to equity of a securities company must not exceed three times. The total debt value does not include customers' deposits for securities transactions; bonus and welfare; provision for unemployment benefits; as well as compensation reserve for investors.

However, according to the draft Circular, the total debt value to calculate the loan restriction ratio only includes bonus and welfare fund; investor protection fund; science and technology development fund.

Thus, the new regulation no longer includesthe item "customers' deposits for securities transactions" in the group of excluded accounts when calculating the loan restriction rate.

Process of suspension of security companies

The new draft Circular also amended, supplemented and completed many processes and procedures, notably the process of suspending operations of securities companies.

Accordingly, if the State Securities Commission decides to suspend one, some or all of the business activities of securities company in the following cases: the application file for the issuance or supplementation of the license for securities establishment and operation contains false information; failsto overcome the state of special control as provided for in Article 92 of the Law on Securities; operates for the wrong purpose or not in accordance with the content specified in the license; fails to meet the conditions specified in Clause 1, Article 85 of the Securities Law or the condition that equity is not lower than the minimum charter capital after the remedial period specified in Clause 2, Article 85 of the Securities Law.

The draft Circular also specifies the time limit for making a decision to suspend one, some, or all of the securities company's business operations, or to withdraw the securities business operations.

During the suspension of operations, the securities company is not allowed to sign new contracts or extend contracts related to the suspended business operations; must perform settlement, account transfer at the request of customers (if any); to have a remedy plan and report on the implementation of such a plan at the request of the State Securities Commission.

In case of suspension of proprietary trading operations, securities companies are only allowed to sell and not increase business investments, except for cases of forced purchase or borrowing to correct transaction errors, odd-lot transactions or implementation of rights related to securities held in accordance with the law.

The State Securities Commission is responsible for disclosing information about the suspension of securities trading activities of securities companies and the withdrawal of securities trading operations (if any), including the following contents: the decision onsuspension and the time limit for the suspension of securities trading activities of the securities company; license number on the withdrawal of securities trading operations of securities company.

The revocation of the license for the establishment and trading of securities will comply with the provisions of Article 95 of the Law on Securities. The State Securities Commission is also responsible for disclosing information on the revocation of the license and notifying the business registration agency to revoke the business registration certificate.